The Socio-economic and Environmental Dimensions of Globalisation 12Ne
19 February 2003





5 (a) EXPOSITORY ESSAY


With the advent of information technology such as the Internet, the world has become a smaller yet more competitive place. Globalisation has also brought with it major transformation in the way commodities are produced throughout the world.


The concept globalisation has often evoked emotive responses and continues to do so. I am of the opinion that globalisation has provided many positive challenges for a country such as South Africa. The South African government has since 1994 made an attempt to create an outward-oriented economy that goes hand in hand with efforts to improve social equity and income distribution.


Thus far the country has enjoyed a modest average annual economic growth of three percent. Inflation was until recently on a downward trend and there are no major fiscal or financial imbalances. Likewise, progress has been made in the area of foreign direct investment. The above factors quite clearly demonstrate an upward tendency in the economy of the country. It could also be argued that the general standard of living will improve as a direct consequent of a healthy economy.


Through globalisation South Africa has not only become an important member but continues to play a leading role in forums such as the World Trade Organisation (WTO), African Union (AU) and the South African Development Community (SADC). For example, the role played by prominent leaders in conflict resolution has created some form of stability in countries such as Ruwanda, Burundi and in the Great Lakes region. The impact of South Africa’s involvement has projected the country in a positive light.


Presently, the South African economy suffers from a chronic shortage of skilled labour. This has negative consequences in terms of economic growth and may hinder the development of labour intensive sectors. In addition, unemployment remains very high and has even been increasing recently however through globalisation, the gradual flow of foreign direct investment will eventually have a positive spin-off. This form of investment will create social stability in spheres such as education, housing and health. In turn, this would lead to producing more skilled labour and an economically productive labour force.


The recent labour market reforms introduced have addressed the need for employment protection in a globalising economy while simultaneously allowing firms to restructure in order to become internationally competitive. In this context South Africa’s existing labour regulations are, by international comparison, not especially stringent. However, the challenge remains that of creating employment and ensuring that the relevant labour market conditions exist to ensure that the countries industries are able to compete in global markets.


With the ongoing insertion of the country into the global economy, and the tendency towards concentration of firms in the urban areas, the importance of metropolitan regions in South Africa is rapidly increasing. However, urbanisation brings with it many disadvantages such as urban decay, sanitation, pollution and the depletion of natural resources. These in turn will result in either an increase in social costs for example, costs associated with poor health or direct expenses in the form of waste management, pollution control and rehabilitation. These costs could in turn negatively impact on the economy.


It is clear that whilst globalisation may hold many opportunities for economic growth, it can also have a very destabilising effect that will require appropriate policy interventions.